S&P defers Philippines’ ‘A’ rating upgrade: Outlook revised to stable on Middle East risks 

While affirming the ‘BBB+’ investment grade, S&P Global warns that energy shocks and a widening current account deficit are stalling the country’s credit ascent.

S&P Global Ratings has pulled back its positive outlook and moved it to stable on the Philippines, while keeping its BBB+ long-term and A-2 short-term sovereign credit ratings unchanged.

The revision signals a more cautious assessment of the country’s near-term trajectory, even as S&P continues to see the Philippines as one of the stronger growth performers in its rating category. The agency pointed to sustained household consumption, steady investment inflows, and ongoing policy reforms that continue to support business conditions and public investment.

Growth is projected at 5.8% in 2026, with medium-term expansion averaging around 6.2% from 2027 to 2029, keeping the Philippines ahead of many similarly rated economies. Inflation is expected to average 3.4% this year, before gradually easing toward 3% over the next few years, as energy-related shocks are seen to be temporary.

However, S&P flagged rising external pressures. The current account deficit is expected to widen to 4% of GDP, while the fiscal deficit may reach 3.3%, reflecting both domestic spending needs and global headwinds. The agency also cited heightened uncertainty stemming from geopolitical tensions in the Middle East as a factor adding risk to external and fiscal trajectories.

Growth still leads peers

Despite these pressures, S&P maintained that the Philippines’ structural strengths remain intact, particularly its external position and reform momentum. Fiscal consolidation is expected to continue, although a full return to pre-pandemic fiscal levels may take longer than earlier anticipated.

The Bangko Sentral ng Pilipinas said it will continue to monitor developments closely to support price and financial stability amid a challenging global environment.

 

 

S&P Global shifts the Philippines’ outlook to stable, citing Middle East tensions and energy shocks. While ‘BBB+’ is affirmed, the path to an ‘A’ rating faces a detour.

 

 

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